The chamber is also activating its 64 joint business councils with industry associations of other countries such as the US-India Business Council and other channels such as Indo-US Business Alliance,to present India's case against imposition of any trade sanctions by the US and other developed nations, according to Ficci secretary general Amit Mitra.

"If the government reduces hurdles to investment, smoothens procedures and provide transparency in policy guidelines, the FDI and FII investment will continue to flow," he said. The crucial test is whether parallel to the political development, the government will make radical changes to make FDI attractive and markets resurgent, Mitra added.

He felt India should not get unduly worried about anyeconomic sanctions as such sanctions would primarily affect inflow of official development assistance. The development assistance, he pointed out, was a small percentage when compared with the inflow of FDI and institutional investment. India has received foreign direct investments of $20 billion as against $1.8 billion of development aid.

Citing the example of China which faced sanctions in the post Tiananmen Square massacre, Mitra contends that the flow of FDI and institutional investments are purely commercial decisions which no governments under any law can restrict.

It is however felt that countries such as the US may consider opposing project linked aid disbursement to India. Further projects which are dependent on Export-Import banks for part funding may suffer a setback.

As for transfer of critical technology, particularly dual use technology, the US has not permitted such transfers to India for a long time.

It is further believed that economic sanctions may not be applied on India since thegovernment has indicated it may sign the Comprehensive Test Ban Treaty.

Meanwhile, AFP adds that international investors will be keeping a wary eye on India's nuclear aspirations, but Monday's unexpected tests are unlikely to spark a panicky flight of capital, economists said on Tuesday.

Indian markets were shaken by fears that the three nuclear tests would lead to international sanctions, as the united states mulled a freeze on aid and Japan said it would consider a review of official assistance.

But analysts said foreign investors will set their sights on longer term economic fundamentals.

"I do not think foreign investors will be reading too much into it," said Miron Mushkat, vice chairman and director of strategy and economics at Indocam Asia here.

"At the moment it doesn't look likely to escalate to intolerable levels from an investor sentiment perspective."

"It is a negative point that I think will be noted but not yet factored in (to investment decisions)," he added.

Foreign investorsfelt that sanctions could hit India's slowing economy, but doubted if the international community would ultimately carry out threats to suspend aid.

"If they came came in reality (sanctions) it would have some effect," an analyst with a major European bank here said.

"But I do not really think there is much substance in the sanctions talk," he said.

The United States said it was considering freezing aid to India under a 1994 law that requires Washington to invoke sanctions against any country -- apart from the five declared nuclear powers -- that conducts a nuclear test.

The sanctions would freeze economic and military aid, bank loans and export licenses to India and would also force Washington to oppose International Monetary Fund and World Bank loans to New Delhi.

India is the World Bank's single biggest borrower with lending of more than $44 billion as of last month.

In Singapore, Javad K.Shirazi, World Bank regional manager for East Asia and Pacific, declined to comment on the issue.

Japan,India's largest foreign aid donor, also said it was reviewing its billion dollar loan programme due to the tests, which it called "extremely regrettable."

Kocichi Hagiwara, overseas investment analyst at Daiwa Institute of Research in Tokyo, however, said: "It is hard to imagine a massive pullout of Japanese investment from India. I don't think Japanese firms, particularly those in the high technology field, will withdraw their investment there since India produces high quality software."

Taiyo Suzuki, senior economist at the Japan Research Institute, said "there will be little economic impact on India in the short term."